buckaroo

I have never seen this before. It show posted and suppressed. I cannot reverse it. I cannot un-suppress it. Has anyone else seen this? Does anyone have a resolution? Do I need to contact Relius directly?

Does the postponement in tax filing deadline (from 4/15 to 5/17) also cause a postponement of when 402(g) corrective distributions must be processed?

I am wondering if anyone is able to answer the above question regarding 414h contributions and the 402(g) limit. The bottom line is do 414H contributions count towards the 402(g) limit?

All: I have a plan with 401(k) deferrals and profit sharing. The plan is top heavy. The elig for the 401(k) is age 21, 1 month of service entering monthly. The profit sharing is age 21, 1 YOS, entering quarterly. It is a new comp plan with each person in their own group. I have an employee with a DOB in 1993 and a DOH of 9/29/2017 who was hired as an intern. On 10/24/2019, she was reclassified as a "regular employee". She did not complete the YOS (1000 hours) in 9/27/2017 -- 9/26/2018 or 1/1/2018 -- 12/31/2018. She will complete the YOS for 1/1/2019 -- 12/31/2019. Based on her data, she will become a participant in the 401(k) portion on the date that she becomes a regular employee (10/24/2019) and she can begin to defer immediately. Since she did not meet the YOS previously, she will not become a participant in the profit sharing portion of the plan until 1/1/2020. So for 2019, she is eligible for the 401(k) portion of the plan. She is actively employed on the last day of the plan year so she is entitled to the TH minimum allocation. The issue is that based on her indicative data and the fact that the 401(k) portion uses an elapsed time methodology for eligibility, I believe that she would be a statutory employee. (She has met age 21 and she has met a YOS, on an elapsed time basis, on 9/26/2018. Based on the statutory entry dates, she would be a statutory employee as of 1/1/2019.) Do you agree? If not, why? Under the assumption that she is a statutory employee, she is now required to receive the minimum gateway contribution. If this is correct and she does receive it, she will have a high EBAR and cause the testing to go from failing to passing. Does anyone see any issue with this? One more thought on this is, if the allocation changes and the testing then fails, I cannot provide her with an additional contribution that would cause her to get something above the gateway as she is not entitled to it. Agree? Finally, the plan calls for compensation while a participant in the plan, so I ask what should her comp be for minimum gateway purposes? Since she is received the TH min, should it be her 415 compensation? If not, what should it be since she has no compensation defined for the profit sharing portion of the plan since she is not eligible. My apologies if this is rambling. Please let me know if anyone has any questions. Thanks in advance.

Our AA has a term called "Years of Service for Eligibility Service Purposes" which defines whether or not its immediate or the employee needs to complete the 12 months as well.

Did you try the ABT? If so, how are you failing that one? If it is the ABPT, perhaps an additional contribution to some NHCEs could help.

My understanding has always been that the Section 415 limits are independent for a participant who works for two unrelated employers. To clarify, Employer A has a plan and the HCE participant has a $55,000 Section 415 limit for 2018 in the plan. Unrelated Employer B (no controlled group or affiliated service group) has a plan and the same HCE participant has a $55,000 Section 415 limit for 2018 in the plan. There is no combined limit. At the 2018 ASPPA conference, I was in a session that was addressing this issue and the presenter said that even if the employers are unrelated BUT there is common ownership of more than 50% between the unrelated employers, then there was a combined 415 limit. I am unable to locate anything in any of my research. Does anyone know anything about this? Did I mishear what was said? Does anyone have a reference that I can read? Is this in the EOB?

How about an example to help clarify: Participant terminates in 2013. The get reported with an "A" on the 2014 Form 8955-SSA. In 2015, they begin taking installments. The get reported with a "D" on the 2015 Form 8955-SSA. In 2017, they stop the installments. They now have a balance in the plan in 2017 and they are no longer taking installments. I would think that the should be reported on the Form 8955-SSA, but how.

How should participants be reported who were originally reported with a Code A, then reported as a D when they began receiving benefits, but then payments cease before the participants are paid out? The instructions to the Form 8955-SSA state that a Code D should be used to report “a participant previously reported under the plan number shown on this form who is no longer entitled to those deferred vested benefits. This includes a participant who has begun receiving benefits, has received a lump-sum payout, or has been transferred to another plan …” The instructions to the Form 8955-SSA have a CAUTION that states: If payment of the deferred vested retirement benefit ceases before ALL of the participant's benefit is paid to the participant or beneficiary, information on the participant's remaining benefit shall be filed on the Form 8955-SSA filed for the plan year following the last plan year within which the payment ceased. However, the instructions to Code A state in part “Use this code for a participant not previously reported.” Should a Code A be used in this situation, should we report using a Code B or is no additional reporting required in this situation? Code B states: Use this code for a participant previously reported under the plan number shown on this form to modify some of the previously reported information. Enter all the current information for columns (b) through (g), as applicable. You do not need to report a change in the value of a participant's account since that is likely to change. However, you may report such a change if you want. We are not aware of Code B being used in this manner. Our understanding is that it is primarily intended for correcting or modifying information incorrectly reported.

My apologies, but I may have missed it. Is this "bonus" simply a bonus paid as compensation or is this made as an employer matching contribution? Or other employer contribution? If it is not a contribution to the plan and it is simply a bonus that is added to compensation, I am not sure the anti-conditioning rule would apply. Isn't this simply an action that is outside of the plan? It affects the participants' compensation but does affect their contributions. Sorry if I missed this in the OP.

Thanks Tom. I appreciate your reply. So for the second part of the question. if a PS has an excluded group from a plan, but eligible for a different plan, would they need to be included in the 414(s) test for the first plan, if they are not eligible for it due to an exclusion in the plan document?

I have a client that has a 401(k) plan recordkept by us and a DB plan recordkept by another firm. Most employees are eligible for both. The compensation definition for all aspects of the 401(k) plan excludes commissions. The employer has a few employees who earn commission only. My general understanding is that if an employee has no eligible compensation for a plan, then they are excluded from the testing. Further my understanding is that only folks who are benefitting form a particular money source are include in the 414(s) compensation ratio testing. Therefore, in this case, if one of my commission only participants has only 100K in commissions, they would not be included in the 401(k) plan's testing (e.g. ADP/ACP, 401(a)(4)) because they are not benefitting. Then, if they are not benefitting, then they should not be included in the 414(s) compensation ratio testing. Is that correct? Part II - If they have a separate division that is include in the DB, but excluded from the definition of eligible employee for the 401(k) plan, then they should be obviously be included in the coverage testing for the 401(k), but not in the benefitting group and consequently, not included in the 414(s) compensation ratio testing for the 401(k) portion. Does this sound correct as well? Thanks in advance.

Thank you for the replies. I am also not seeing this as clear cut, but I wanted to see if anyone else thought it was. I also think the spirit of the law was the second option, but I can see where folks could justify the first option. Does anyone have any other thoughts on this one? All opinions are appreciated.

I have a client that is part of a controlled group. There are two members of the controlled group: Company A and Company B. Each Company maintains their own profit sharing plan. They are able to pass coverage annually under the ratio test, taking into account the employees from the other company in the coverage group. They did so for the 2017 year. In 3/2018, Company A acquires Company C via a stock acquisition. Now, all three (A,B,C) are members of the same controlled group. For the 2018 year, they are looking to take advantage of the transition rule. My question is: Does the transition rule dictate that the plans for both A and B are automatically deemed to satisfy coverage (assuming that no significant changed during the transition period) and no coverage testing is required at all OR does the coverage testing still need to be run for the plans of A and B taking into account the employees in A and B and not C? Thanks in advance.

Thanks Tom for replying. So for the plan, the person in question in #3 has an entry date into the 401(k) of 1/1/2017 and an entry date of 1/1/2018 for the profit sharing, I should use the 401(k) eligible comp for the gateway? If that is the case, then I still have the same probme as the 401(k) comp is the full year comp? If not, I can put the entire comp amount in the prior to participation comp fields but then he will have zero eligible comp for a variety of purposes including the gateway and 401(a)(4) testing. Should he just not be included in the gateway and the 401(a)(4)testing? One other thought: I have done some research and I have not found anything definitive regarding determining the Statutory Employees on a money source basis. IN other words, I see nothing preventing me from defining the Stat Employees differently for 401(k) versus profit sharing. So if I am using the plan entry method, I see nothing preventing me from using the monthly entry dates when performing the coverage and ADP testing and the quarterly entry dates when performing the coverage and 401(a)(4) testing on the profit sharing. In this case, he would be a stat employee for the 401(k) and an OEE for the profit sharing . Have you seen anything like this? Do you know of any definitive guidance that would prevent me from doing this?

Plan is as follows: 401(k) - 1 month of service and monthly entry Profit Sharing - Age 21 - 1 YOS - Quarterly entry The plan is top heavy. 1) Can I use the comp while a participant in the profit sharing portion of the plan for the minimum gateway testing *(both 414(s) and 415) even though people not eligible for the profit sharing are receiving a TH min on the full year comp? 2) For Relius users: If the answer to #1 is yes for the comp while a participant, does Relius define the compensation for the gateway testing properly or does it have to be overridden? 3) If I have a person hired on 11/14/2016, they are not eligible for the profit sharing (until 1/1/2018 so he has no eligible profit sharing compensation for 2017), but they get the TH min, what compensation do I use for the gateway test? 4) Related to #3 above: At this point, I am using full year comp as I do not have any comp while a ptp in the profit sharing portion. FYI - They are in my stat employee group because I am using the plan entry option as I need the younger people to help pass the rate group testing. (If I used the stat entry method, the younger group would be put in the OEE group and the test would fail.)

There is some debate regarding a vesting question: Plan B is merging into Plan A effective 1/1/2018. The vesting schedule for Plan A is better at every point. The plan sponsor wants to have the old (worse) schedule apply to the old money for all merging participants. Two questions: Does the merger with different vesting schedules constitute an amendment of the vesting schedule? Must the new (better) vesting schedule apply to old and new money for a participant who works an hour of service after the merger date?

Are pre-approved plan document vendors generally providing sample sponsor amendments to permit rollovers from a qualified plan to a SIMPLE IRA (i.e. PATH Act of 2015)?

One of our plan sponsors was recently acquired and the acquiring company decided to merge the plan that we recordkeep into the acquiring entity’s plan effective 4/28/2017. We informed the plan sponsor that this creates a short, final plan year for the plan (1/1/2017 – 4/28/2017). We discussed the notion that the regulations are unclear regarding the ADP/ACP testing in a year of merger. Based on our conversations, we stated that we could provide an ADP/ACP test for the short year and requested the appropriate census data to perform it. At this point, the plan sponsor has still not provided the data. If the plan sponsor goes with this testing methodology, my questions are: How does the 2½ months factor in regarding the 10% excise tax? Since the plan terminated and merged effective 4/28/2017, what the last date to perform the corrective distributions (if any)? (When does the 2½ month deadline expire?) I know for the Form 5500, regardless of when the plan terms, you have 7 months from the last day of the month in which the plan terms. I do not see a similar rule for the ADP/ACP testing. Is this even an issue since the assets merged into the other plan on 4/28/2017? Has a “corrective distribution” effectively been performed? Either way, the funds should be either removed from the other plan (no recharacterized as post tax). Does the 2½ month deadline apply to this action?

Any thoughts on questions 2-4 in the OP?

Yes Tom, I believe it is a typo as well as it was a direct quote. Anyone else have thoughts on this one?

Thanks for your replies. However, I still think that I am correct in my reading of the ACP testing. After I took a look at your replies, I took another look at the EOB - Chapter 11 Section VII (Page 11.119). This section directly from EOB seems to support the notion. Please see the below: This indicates that the amount is taxable in the year in which it was re-characterized and should be included in the following year's ACP testing. Please take a look and feel free to comment. Any comments are greatly appreciated.

I have a client that wants to add an after-tax provision to their plan document. One of the reasons for this is so that the HCEs who are due corrective distributions (due to an ADP test failure) can have them recharacterized as after-tax employee contributions. I wanted to do some research before I consulted with them and I ran across 401(m)-2(a)(4)(ii). It says: Upon reading this, it appears that if a ptp has a pre-tax elective deferral recharacterized to an after tax, that the after-tax contribution is tested in the ACP in the year in which the recharacterization is performed. (This is very surprising to me.) To clarify, calendar year 2016 test. ADP fails and recharacterization occurs in 2/2017. From my reading of the above, it appears that the recharacterized amount would be include in the 2017 ACP test. 1) Do I have this correct? 2) What if the participant terminates prior to the 2017 plan year? Does the participant have compensation for ACP purposes? Does the recahracterized after-tax contribution count as compensation? Eligible compensation? How does this get included for ACP purposes? (I would not include this person in the ACP test if they did not have eligible compensation and work during the plan year.) 3) Same issue as #2 above, but let's say he works 1 day in the 2017 year and earns a very small amount. 4) If the elective deferral is a Roth elective deferral, I would think that this changes the issue and the recharacterized amount would then be included in the 2016 test as it was taxed in 2016. Any help is greatly appreciated.

Two employers in a controlled group (100% common ownership). Effective 1/1/2017, a large portion of the second employer was sold so that no controlled group and/or affiliated service group relation ship exists. Plan is now a multiple employer plan. Questions about 2017 testing (just trying to be ready): 1) How are the HCEs to be determined? My assumption is that the HCEs would be determined by looking back at the compensation earned in the prior year when it was a single employer plan. However, I cannot find anything definitive to back this up. Does anyone have supporting documentation? If this is not correct, one alternative I thought of is do we need to look at the compensation earned by each individual employer when they were in a control group. 2) The plan utilizes the prior year testing method for ADP/ACP testing. My guess (and it is only a guess) is that the prior year NCHE % would be determined by looking back at prior year testing and using that % for each of the two tests. However, I cannot find anything definitive to back this up. Does anyone have supporting documentation? If this is not correct, one alternative I thought of is do we need to calculate a weighted average of some kind? Thanks in advance.

Thanks for the comments. I am in agreement that this seems too aggressive (hence my comment in the OP that it does smell right), but I am still trying to wrap my arms around the best way to convey this to the plan sponsor. The vast majority of the time, I can point to a regulation or a plan document provision. In this case, based on my thought and my reading of the above comments, there does not appear to be a regulation or a plan document provision. I can certainly convey to the plan sponsor that it could be viewed as a deemed CODA or an age discrimination issue. I can also point to the Carol Gold memo as an example of what the IRS is looking out for. Are there any other suggestions on ways to dissuade the plan sponsor?